10 OCTOBER 2008

Hiroshi YASUKAWA: Actually for us the environment and ecology is very important and fortunately we at Bridgestone are working with the FIA, not only in motorsport but also the road safety campaigns, and now we are going to start this campaign. We are very happy working together and everybody has to have concerns about ecology and the environment and the car manufacturers are always producing very good technologies which sometimes transfer to motorsport as well. Anything we can do, we are very happy.

Q: For the team principals: how important is environmentally relevant technology to the future of motorsport?

Nick FRY: In our view it is absolutely critical. Formula One should run side-by-side with road car developments. The technologies which we are developing in Formula One should have some linkage to the basic business and in the case of Honda clearly the hybrid technology which is very similar to the KERS system that we are putting on Formula One cars next year is very dear to our hearts. It is featured on the current Honda Civic. We have got a new low cost hybrid being brought out in very large volumes next year and having Formula One and the road car side use relevant technologies is critical. What we hope for the future is that there will be further evolution of environmentally friendly technologies on the Formula One car. It really does work in synchronisation with what we are doing on the other side of the business, so we are very, very supportive. We are very pleased with our green tyres as they match the rest of our car very nicely. So thank you, Bridgestone.

John HOWETT: Probably a slightly different view. The main issue is that the carbon footprint of motorsport is extremely small, so the main thrust from Toyota is addressing the real issue which is the fact that we supply 10 million vehicles a year. Our thrust really is to make a real contribution to the core issue. Also to an extent the KERS system next year has the components and, if you like, concept similar to hybrid but because a Formula One car is running wide open throttle over 90 per cent of the time and in a road car hybrid you are using this technology really in city conditions in contributing to, shall we say, reduction in fuel economy, the application is completely different. Whether or not we wish to use Formula One shall we say to convey using its power, ecology and ecological behaviour to consumers is a different issue from the core aspect from our perspective of racing.

Mario THEISSEN: A slightly different position again. We are excited about the KERS system and the new regulations. Different from what John says I am pretty sure this will really speed up the development of future road car hybrid power trains. KERS only makes sense to us in Formula One if we are able to increase power density and the power to weight ratio of the KERS components by a factor of four to five compared to current road car solutions. This will immediately spur the development of future road car components as well. It perfectly fits with our approach at BMW to use the Formula One project not just as a marketing tool but as a technology pioneer. We have been able to raise synergies over the years on the power train and this will be taken to an entirely new level with the KERS system and what might follow. We really support the green campaign, although as an engineer I am more interested in the substance than the colour and if it was just about painting something green the true pioneers on the ecological side would have been the old English racing cars which used to be all green. But I think it is an exciting opportunity for motorsport and for Formula One and you know we have been supporting, or have been one of the strongest supporters of KERS from the very first moment.

Q: Hiroshi, tell us how the tyres are behaving this weekend, the initial performance that you have seen so far.

Yasukawa: We have the medium and soft compound and I think this circuit, for the first time in dry conditions, is very challenging and interesting but anyhow we are going to support all teams and it should be no problem.

Q: It looks as if the front left tyre is coming in for a lot of hard work.

Yasukawa: Yes, this is true. After this session out engineers and the teams' engineers are going to discuss how to maintain the tyres.

Q: To the three team principals: you have been invited to a meeting with the President of the FIA. What specific areas are there where you can see that savings can be made in Formula One?

Fry: I think the first thing to say from our side and I think with all the other teams we do feel there is a need to reduce costs. The important thing from our point of view is to reduce costs which frankly are wasted expenditure and I think there are several of those areas. Whether they are enough to meet the targets that we need is another matter. In terms of specifics I think the one that is frequently cited is the area around the brakes and the brake ducts, the so-called keg tins, which surround the discs and duct the air. It is an area where probably the number of physical moulds that are required to make those parts have doubled or even tripled over the past couple of years because the parts are so intricate. We now all have very similar systems and it is very expensive. A lot of the aerodynamic testing goes into that area. It is probably not an area of performance differentiation and that is probably an area where we could do something which reduces costs. I think there is general agreement that the gearbox is an area where we have all now migrated to so-called quick shift gearboxes. I suspect we have all got slightly different mechanisms inside but again it is not a performance differentiator. Another idea that is being worked on is the centre of gravity of the car. Weight reduction or specifying a weight target is one thing but when we spend literally hundreds of thousands of dollars to move weight from slightly higher up to slightly lower down and then add tungsten on the bottom of the car, again is somewhat wasteful and again the general opinion among the technical directors and from Ross (Brawn) who is running that group is that a lot can be done in that area. The power train, the engine, is an area where I know there is more controversy. I think we all do feel that we could migrate to a lower cost power train. The V8 19,000rpm engine we have at the moment is hugely expensive, up to about 300,000 ‚Ç¨ per unit. They are immensely expensive and going to a different type of engine, maybe a four cylinder engine, would be cheaper with all the environmental technologies hung onto that. I think certainly from the Honda side and I suspect from some of the other manufacturers' sides we would like to preserve the ability to design and make that engine as it is part of our brand identity but making the specification a lot more prescriptive, making it a lot cheaper, is something I think that many of us would support.

Q: John, any specifics?

Howett: I don't really want to go into specifics. I think they are unique to each team. I think the meeting which we have been invited to was really following the meeting between Luca di Montezemolo and Max Mosley. I think that the teams have a lot of ideas to actually save money but at the same time not destroy the core DNA or value of Formula One. I think that given a constructive discussion and hopefully shall we say using the current environment of 'financial crisis', people could take a political advantage and try to apply unnecessary pressure and hopefully for once we can put politics behind these discussions and really focus on the facts, the real issues and then we will find, I am sure, good solutions.

Q: Nick has come up with certain specific areas. Is it not possible for you to do so?

Howett: Yeah, of course. I mean fundamentally, I am sure teams can say without changing anything, which is what we do regularly by good value added engineering, actually reducing production processes by standardizing tooling, you can make massive savings. That is one issue which absolutely has no impact whatsoever on even the current regulation. If you look at it, this coming year, ironically, we are faced with a totally new aerodynamics package which means the concept of the car changes completely and we integrate KERS, so we are facing, if you like, an environment where cost saving is relevant but all the regulatory changes are technically forcing cost upwards. My position would be, there are a lot of concrete ideas but we need to have a cohesive, focussed unpolitical discussion using facts and we will find a simple solution.

Q: Mario?

Theissen: Not much to add really. In my view the ongoing discussions under the umbrella of FOTA are very constructive, the most constructive I have seen in Formula One because it is clear to all of the teams that we have to do something, we have to achieve something and it only works if we come to a joint proposal. There are several technical working groups, one for the car and another one on the power train or the engine itself and the commercial and sporting working group, lots of good ideas. I am sure within a few weeks or months we will be able to come up with proposals which will really make a difference to what we see today in terms of costs, in terms of improving the spectacle and the commercial viability of Formula One.

Q: Any specific areas?

Theissen: We could talk for hours about specific areas. As I said the engine working group in my view is making very good progress which wasn't possible in the past. They have framed the concept of a future engine, the next generation engine, they are thinking through how we could get there and in what time, could we take any intermediate steps on the current engine like extending its life to three race weekends in order to help the independent teams. Things like this. On the car side there are lots of ideas as well. Personally I was a bit surprised that the idea of a budget cap was buried so early this year. I think there would be potential. And on the commercial and sporting side there are ideas as well.

Q: Hiroshi, what sort of progress is being made on the slick tyres? How are you going to let us know which is the softer tyre and which is going to be the harder tyre?

Yasukawa: The regulations are going to change, I believe, to slick tyres. But fortunately we have much experience with slick tyres in Indy Cars and Formula 3000, the many categories we are supporting. Our engineers have lots of experience. If you compare the same tyre - groove tyre and slick tyre - slick tyre life is longer than groove tyres which means you can put on a little bit more softer rubber.

Q: And have you decided how you are going to tell us which will be the soft ones as the white lines will disappear?

Yasukawa: This is still under development.

Q: Nick, I understand that you have got a new pit signalling system here. How does it work and how are you going to make it work where perhaps for others it hasn't?

Fry: It is something we have been working on actually for quite a long time and we are not proposing to use it at the moment in races, probably until next year. But we are going to use the Fridays and maybe Saturdays over the next few races to practice. I think the answer to your question and I am not going to go into the technical detail because I am not equipped to do so, but I understand that the philosophy of design is maybe fundamentally different to some of the others. The first emphasis is on safety and the second emphasis is obviously on performance and I understand our system is designed in such a way that if the fuel hose is not disconnected the car physically won't be able to move. That is the primary feature. The secondary feature are features which hopefully will improve the speed of the pit stop but from what we understand of other people' systems it might be designed from a slightly different point of view. We don't have a safety concern given the philosophy but we do want to use it extensively before we use it in anger.

Q: John, you are in a tussle with Renault for the Constructors' Championship. Any specific moves here for your home race?

Howett: No, we are working as hard as possible to have a good result. But we have to see where we are, probably tomorrow in qualifying in Q2 and our relative pace, but obviously we are fighting hard and trying to get the best results we can in the last three races.

Q: Was it a bit of a surprise that Renault came back with that win in Singapore?

Howett: I think between ourselves, Red Bull or Toro Rosso or Renault it has been very, very close, so we are not surprised. I think it will change race by race.

Q: Mario, you've announced you're going to keep the same two drivers, how difficult was that decision and when was the decision taken?

Theissen: The decision was not easy as I had hoped for initially. Initially we expected to take the decision in the summer break but then Nick had quite a difficult season, especially in qualifying. He wasn't able to get the perfect lap time together and so we decided to postpone the decision. At the same time, I gave him every support to overcome this weakness and so when we saw a significant improvement in the last two or three races, we could be confident that he was back on form. He was back to his latest performance and that led us to the decision right after Singapore.

QUESTIONS FROM THE FLOOR

Q: (Joe Saward - Grandprix.com) Three of the four of you are involved in Formula One to sell cars. At the moment there's a bit of a financial crisis around the world; what do you think the real impact of that will be on Formula One and as a secondary question, how do you feel about not being in North America at all, the world's biggest car market?

Theissen: The second question first: obviously we are not happy about not being in North America. The US is the most important and biggest car market for BMW and I think for the industry as a whole. It has always been difficult to set foot into the US but Canada has always been a very strong Formula One supporter and the race in Montreal. I have seen the race in Montreal as an operational base to get a second race up and running in the US, and so we would, rather than drop the Canada race, use it or expand the operations in North America to have a Canadian plus at least one US race.

The other question? Financial crisis, economical crisis world-wide. Well, the answer is simple. Formula One is of this world and so Formula One will be affected as other industries are affected, as all the sponsors are affected. Basically every stakeholder in Formula One is affected and so we have to deal with it like any other operation.

Howett: I think we need to put things in context really. The first is if you look at some of the figures released for the British premier league in terms of teams' liquidity, the issues being faced by F1 teams are relatively minor. If you look at the advertising budgets of large corporations excluding car manufacturers, they are over $2-3bn a year, so I think one of the issues is to continue... because Formula One is so powerful and so strong, to actually work with the commercial rights holder to actually demonstrate the value of utilising Formula One as a marketing tool and I think we need to use more effort on that. Clearly as a car manufacturer we will come under pressure because a number of markets are depressed, others are fairly buoyant like Russia and China, but I think the strong companies who continue to invest in marketing, who continue to invest in technology, will become the winners. We should also look at the opportunity that this sort of situation presents, not only the pressure, so you can paint a very black picture or you can say there is a lot of upside here for Formula One and also for those well-managed Formula One teams and well-managed manufacturers. So yes, we will go through a hard time, I'm sure that we will all survive, we will probably come out with a strong sport.

Canada? We are sad because it's a great race, we like to go there. I think one of the targets of FOTA is to actually ask the commercial rights holder to really establish a strong foothold in North America, particularly the US, with a race which showcases Formula One well, and is, if you like, economically beneficial to Formula One as a whole. So I think this is one of the core discussions FOTA wishes to have because it is a very important market for our sponsors and for Formula One and hopefully in the next one to two years we can establish a proper race in the United States which is good for all of us.

Fry: On Canada, we are hugely disappointed - it's difficult to emphasise by how much. Honda is very successful in Canada, we make cars there, the local company there is hugely enthusiastic about Formula One. We have large numbers of guests from America and from Canada. We sponsor the event, we would like to see it back on the calendar as soon as possible and I support John's comments that I think it will be a major topic of conversation among the teams at the next meeting of the teams. I think we need to look at North America on a more strategic basis. As soon as we were down to one race on the continent, things inevitably were going to get difficult because the costs of transportation and appearing just once across the other side of the Atlantic were huge and I think really we need to look at how we're not just going to get back Canada but how we get back to America, potentially more than once, as it is such an important market.

On the other subject, I agree completely to the previous comments. The thing I would add is that we do need to work together as ten teams to make sure that the ten teams stick together, work together and survive. We've got a fantastically successful series, we've just come off the back of arguably one of the best weekends and we need to preserve that. Like Mario, I'm incredibly encouraged by the first round of meetings of FOTA but the first meetings are inevitably usually the easiest ones. It's when you get down to the nitty gritty it gets somewhat more difficult. There's a lot of diversity in the income and the levels of sponsorship, the parent company ownership of the teams. At one of the scale is probably a company like Honda or Toyota or BMW which are extremely successful in share price. Certainly Honda has done rather better or lost rather less than most of the others but we shouldn't be complacent and what we've got to do is to make sure that other teams which maybe aren't making money and do have sponsors that are hugely affected by the latest financial crisis do come through it and I think FOTA and the meetings with the FIA and with Bernie (Ecclestone) are the mechanism to try and make sure that happens. We really do have to pull together, we've got off to a good start but the difficult bit is yet to come.

Q: (Ken Kawakita - Sportiva) Again, I would like to ask you about the recent economic crisis. The situation is very difficult to predict; how quickly do you have to react to this economic situation? You have been talking about cost-cutting and now it looks as if you've made a practical step but is the regulation about the long-term future quickly enough? Will you have to make a change a bit earlier than you expected?

Theissen: We have heard right now that Formula One is a very strong operation and it's a big operation and it's very much technology-driven, so that means there is no need to panic, that's message number one. Message number two: you cannot change things of this technical complexity overnight, so we need to take a reasonable approach, an approach which satisfies all the needs including the need for all the teams involved to cut costs. On the other hand it has to be a viable route which means we cannot come up with a low cost engine within a few months. This would require huge additional expenses on the manufacturer side, so that means we have to look at a certain period of time and at a combination of measures which can lead us to the final target which is do-able in the short term and then prepare for the long-term future in a commercially viable way.

Howett: I think that the danger is that a knee-jerk reaction could be catastrophic. In the end, if we have pressure, we will be told that's the budget and we will survive. In the end, I suppose there are three core drivers of the cost: one is manpower, second is investment which fundamentally we have to pay for because it's capitalised and has to be depreciated and the third is the material used, what we actually use for each race. Very simplistically, if we get told this is the budget for competing this year, next year we will compete and we will do the best available job that we can within that. Obviously the social issue is what will happen to the motor sport infrastructure and it goes beyond teams. The UK, in particular, I think has a multi-million dollar motor sport industry which could be destroyed and that, I think should be something that people do worry about and take into consideration, but in the end, simplistically, if Toyota tell us that's the budget, we will operate at that budget and make the best professional decisions to handle that.

Fry: I see this in the same way as you would address the problem in any other business. It needs a range of actions, some are short term, some are medium term and some are long term. You divide those up: some things are impossible in the short run. It's not possible to design a new engine in six months, that's in the medium or long term, that's two years. People do have employment contracts and we have to respect that, that's another medium term one but I do feel that whilst we shouldn't panic, we need to do things for the short term and that means next year. It's difficult to say otherwise when you have five thousand people laid off recently at a car factory in France. How can that manufacturer turn to its employees and say it's not going to do anything. There's a requirement for some of the Formula One teams to have instant action. You've only got to look at the accounts of some of the Formula One teams to see losses over the last couple of years and that needs to be addressed. The bank manager is not going to lend any more money. I agree completely with what's been said: we shouldn't panic, we shouldn't do anything which is going to harm something which is very successful but on the other hand that doesn't mean do nothing. It means you've got to do a bit of everything and you've got to start now, and I think that's the message, rightly so, and we've got to come up with the appropriate response.

Q: (James Allen - ITV) Question for Mario: with these spec engines that they're talking about now, where you're all given a set of plans and you go away and build the engine, how does that fit in with the idea of controlling the power, however much power you can get out of a fixed unit of fuel which was the idea that Max (Mosley) had in the early part of the summer? Is that still part of this plan or has that been moved off the agenda now?

Theissen: You mean the plan of the engine working group or the plan of the FIA?

Q: (James Allen - ITV) The plan that's being discussed at the moment between the teams with the FIA to have a spec engine, a spec drive train to bring the costs down. How does the technology of getting a performance differentiated by how much power you can get out of a fixed unit of fuel, how does that sit with having a spec engine?

Theissen: I'm still not sure I really understand the question.

Howett: I don't think there has been any discussion between the FIA and teams of a spec engine. There's a lot of speculation and there's been, I think, some allusions in the press releases towards that, and I think a lot of the manufacturers are concerned about having a spec engine, because one of the core interests is at least having some differentiation in the power unit. And also you have to look at probably the current cost of the engine could be replaced by the cost of KERS. If you look at road car technology, a lot of the current and ecological developments are coming from the engine, not necessarily only - shall we say - a hybrid add-on. So direct fuel injection, multiple injectors per cylinder, lightweight materials, a lot of which are banned from Formula One. So I think we need to have a serious discussion without politics between the professionals to try to find a compromise which supports the small teams and actually gives the right result for the manufacturers and I think that can be achieved.

Q: (Ed Gorman - The Times) Can I just pick up what John Howett is saying. Bernie Ecclestone has said this week that he wants a standard engine in Formula One, and he's talking about massive cost-cutting of up to 95 percent in drive train costs and what's evident from what all three of you have said here today is the huge difference in view. You're talking about incremental change, short term measures, importance of not making knee-jerk reactions but he is talking about absolutely huge changes in the philosophy of engines and the cost. Is he talking nonsense because it sounds like you have got a totally different view of how the future's going to develop?

Howett: I could say controversially that the negotiating stance historically in Formula One has been to put an extreme proposal on the table and then that encourages the teams to move in a direction, so we may just be, at the moment, purely in a negotiating tactic. I don't know. I haven't heard from Bernie directly, what his ideas are but I think we run the engine departments and we know the exact figures of what we're paying and where our resources are being used, so we must be better able to actually have a professional discussion on the right solution.

Q: (Ed Gorman - The Times) Isn't it eventually going to come down to how much of an engine you have to build to be able to say it's a Toyota as opposed to just a standard engine? Isn't that essentially what it's going to come down to? Because he wants you to have a standard engine with a bit of face-saving stuff, so you can say it's a Toyota.

Howett: Then we have to decide whether Formula One is the right environment for various manufacturers to remain in and I think that's the discussion we need to have and whether it's the right core value that the fans wish to have and that you as the press wish to have. So there is, I think, an important facet in maintaining Formula One as the pinnacle of motor sport and how to achieve that will be the balance. I'm not rejecting cost-cutting at all. I just think we need to do it in a professional and correct way.

Theissen: Total support.

Fry: Yeah, I support exactly what John says and without being semantic about it, I think we do have to define our terms. I think most of us are not happy at all with the idea of a standard engine which we would define as an engine, maybe even designed and made by someone else, similar to the old Cosworth DFV and that's not something that Honda, and it sounds like, Toyota and BMW would particularly support. In our case we are the largest manufacturer of internal combustion engines in the world, it's the core of the company. But on the other hand, a specification engine or a prescriptive engine, where the design was very, very tight, the materials were very tightly controlled, it was maybe a four cylinder engine which was much cheaper but we had the ability to put our brand identity on it in that we were designing it, we were making the thing, then that's a very different proposition and I think you would be able to reduce the costs very significantly by doing that. So I think the end result may not be massively different but the thinking behind it is very, very different.